NeuGen Lawsuit

Wisconsin-based NeuGen, Sues MassMutual To Recover Members’ Money Investment Firm’s Actions Cost Those Losing Their Jobs Over $3M

For Further Information Contact: Steve Lyons (608) 220-7478

MADISON, WI. Wisconsin-based NeuGen LLC announced today that it has filed a lawsuit against east coast investment firm, MassMutual. The lawsuit is in an effort to help nearly 300 former NeuGen employees, their families and retirees recoup money from the billion dollar investment firm MassMutual.

In the Fall of 2022, NeuGen, part of a Wisconsin-based group health insurance organization, informed MassMutual that it was downsizing its workforce. In response, MassMutual abruptly terminated NeuGen from participating in its fund, forcing NeuGen participants out of their investment at a depressed market value. Two hundred ninety-five employees and retirees were invested in the fund. As a result of MassMutual’s actions, NeuGen participants in the fund saw their retirement investment in the fund drop 18% in one day. All told, nearly 300 employees lost roughly $3 million.

Laura Calay, a single mother of two and retiree stated, “It is simply the worst thing you can do to someone. We are told that we are going to lose our jobs, and then MassMutual, the company we trusted with our retirement, cuts us off at the knees. My co-workers and I lost nearly 20% of our retirement in a single day. If this isn’t illegal – it is surely immoral.”

“We trusted our asset managers, MassMutual, to help achieve financial independence so we could retire and support our families. MassMutual kicked 300 people when we were down and needed them the most. I suffered, my family suffered, and my future financial independence suffered. Decency has been replaced by corporate greed,” said Beth Germain, a former employee of more than 20 years and a mother of a five year old daughter.

Vaughn Vance, President and CEO of NeuGen LLC stated, “Our filing of this lawsuit is about what is right and what is wrong. MassMutual determined that it would immediately pay the ‘market value’ and leave participants a fraction of what they believed they had in their accounts. MassMutual ignored better options for our participants that would have preserved the value of their retirement accounts.  This type of business decision is just wrong.”

Vance went on to say, “NeuGen is committed to making participants made whole. We worked closely with our employees when we downsized because we care about them and their future. The action of MassMutual is unconscionable. We believe that our retirees and the hardworking men and women who provided for their families will prevail over the interests of a company whose CEO’s compensation is more than $13 million a year.”'

NeuGen Lawsuit

NeuGen Vs. MassMutual

About NeuGen

Founded in November 2018, NeuGen is a Shared Services organization based out of Madison, Wisconsin. It was created by the not-for-profit WEA Trust, which was created by the Wisconsin Education Association Council (WEAC) to provide insurance and retirement benefits for Wisconsin public school employees.

 

Frequently Asked Questions

Why has NeuGen filed suit against MassMutual?

In August of 2022 NeuGen announced plans to lay off at least 110 employees. Upon NeuGen’s employee layoff, MassMutual declared a total termination of the Agreement and distributed the Fund to the Plan participants at Market Value.

At the time of the termination, the Market Value of the Fund had decreased by a significant amount and was well below Book Value. MassMutual nevertheless proceeded to distribute the Fund at the depressed Market Value and well below Book Value, causing financial damage to the Plan and its participants.

NeuGen, created as a not-for-profit entity by WEA Trust in 2018, witnessed several former employees lose nearly 18% of their retirement savings in 1 day when MassMutual removed NeuGen employees from their MassMutual Stable Value Core investment option and felt something must be done to address this questionable business practice.

How many people were impacted by MassMutual’s actions?

In total, nearly 300 individuals, including employees, NeuGen retirees and family members were enrolled in the Stable Value Core investment option.

How much did NeuGen employees, their families, and retirees have invested in the Stable Value Core investment option with MassMutual?

Approximately $21.5 million

How much was lost by the NeuGen account holders?

18% overnight

A total of nearly $3 million was lost by former NeuGen employees, their families, and retirees.

Dozens of participants experienced tens of thousands in losses with some exceeding $150,000.

These losses were magnified as a result of many MassMutual actions.

How many years did MassMutual manage retirement accounts for NeuGen?

Nearly nine years, December 2013 - August 2022. During this time MassMutual made millions of dollars in profit while promising members a conservative rate of return while MassMutual received substantially more in the market.

What is MassMutual’s Stable Value Core investment option?

A conservative investment option for participants to protect their investments against market fluctuations by providing participants with a stable and predictable book value at which they can withdraw their funds for retirement.

According to MassMutual, “Expected Benefits of Stable Value Core Product”:

  • Principal Preservation
  • Seeks steady, positive returns in excess of money market rates
  • Insulation of participant account values from market fluctuation

What was the average participant’s balance?

Active employee participants held an average account balance of $57,000, while retirees held an average of $117,000.

What was the highest account balance of a NeuGen participant?

A high of $850,000

Book Value is the value reported to individual participants on periodic statements.

Market Value was well below Book Value due to market conditions and the performance of MassMutual’s investments.

Does NeuGen benefit financially from this lawsuit?

NeuGen is filing this based on a belief regarding what is right and what is wrong. This deliberate action by MassMutual has hurt hundreds of people, costing them millions of dollars – NeuGen entered this to defend former employees who gave so much to their former company.

What will happen next?

NeuGen filed suit in Superior Court in Massachusetts. NeuGen is hopeful for a swift decision in favor of the nearly 300 people whose retirement savings were affected due to the actions of MassMutual.

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